Top Challenges Facing Bank CIOs Over the Next Year

Bank Systems & Technology asked several industry experts for their take on what will be the next big issue bank technologists will tackle in 2014.

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As Bank Systems & Technology rolls out our 2013 Elite 8 award honorees this week, we acknowledge innovative work done by bank technology executives over the past year or so. But the work of a CIO is never done; in today's rapidly changing landscape the bleeding-edge technology of today could be commonplace six months from now. And CIOs may be tackling problems they don't even know exist at this point. So, what might be some of the projects our 2014 Elite 8 honorees will be working to solve? We asked a panel of industry experts to the question: What will be the biggest challenge facing bank CIOs over the next year?

While bank CIOs will deal with many challenges in the coming year as they face ever more complex organizations with vast and growing needs, one particular technological challenge raises to the top: Dealing with the complexity of data. The massive explosion in data is creating unprecedented manageability issues for banks around the world that can be linked to the following factors:

-- Rising data security concerns that continue to plague banks, both internal with the emerging challenge of Bring-Your-Own-Device, and external with mitigation of security breaches, malware attacks, service interruptions, and loss or theft of customer data.

Meeting these data-volume challenges can be costly: Legacy core banking systems involving multiple data warehouses and various transactional systems add up to a high total cost of ownership and require constant need for integration and interoperability. Increased regulations and compliance involving the tracking of financial transactions and customer data have augmented the responsibility of banks so that they must maintain the data, its accessibility and provide greater transparency to the regulators.

Implementing effective data access and management standards coupled with a nimble infrastructure architected around new delivery models such as cloud computing and using emerging technologies like Hadoop to leverage the power of unstructured data will be critical components in the arsenal of bank CIOs. With such imperatives in place, banks will be able to shift their focus from dealing with the complexity of data analysis, governance and distribution, to actually harnessing the data and using it to their advantage.

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio

That's a long ongoing challenge. I think many banks have been working on that the last few years. But with each new regulation the challenge transforms with different requirements and divisions involved.

I'm definitely hoping to hear more from the financial services community about how CDOs and Chief Data Scientists (CDS) fit into the organization. Right now, it seems to depend on the firm. Some have the CDS/CDO as part if the tech group. Others have them in the data group. And some have the CDO/CDS in separate groups. It's worth looking into.

I think there is also a big need around better collaboration tools to help enable innovation. Financial services organizations have been leery of third-party tools to help with that, but greater collaboration across organizations is a necessary ingredient for innovation.

Institutionalized innovation sounds like an oxymoron. However, you are right...many companies are trying to do just that. I guess that companies see how Google has institutionalized innovation by allowing employees to have a day to experiment with new ideas. Fidelity, State Street and many other financial services organizations have small (and sometimes large) groups that are trying to find new ways to approach old business problems.

I agree with each of these forecasts, but I think they all suggest another necessary focus/challenge for CIOs -- the need to work and coordinate increaslingly closely with a new generation of business executives: chief marketing officer, chief data/science officer, chief customer experience officer, etc. All these old/new functions are technology based but have their distinct mandates, too. CIOs will be have to be able to deliver and navigate in this environment.

I think one of the most interesting trends to watch in IT organizations across all industries, not just financial service, will be the efforts to "institutionalize" innovation --what you can do in terms of structure, job descriptions, incentives/compensation, training, etc. to make innovation part of everyone's job and something that happens in a meaningful way, not just buzzwords or rhetoric. Lots of efforts right now around innovation labs, hackathons, Chief Innovation Officers, etc. -- remains to be seen what kind of long-term impact these will have.

I liked Jegher's point about innovation management. In insurance we are seeing a proliferation of innovation labs and blitzes aimed at finding breakthrough apps. But I do wonder about the concept of putting structure around innovation. Can companies capture and recreate the spirit?